The Finance Minister had stated earlier that CBDT will issue a policy circular to clarify that in cases where assessment proceedings have become final before first day of April, 2012; such cases shall not be reopened.

Now CBDT has issued a letter confirming statement of Finance Minister. The Letter is as follows:

In exercise of the powers conferred by clause (j) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as “the Act”), read with sections 31, 32 and 32A to 32P of the Central Excise Act, 1944 (1 of 1944) made applicable to service tax vide section 83 of the Act, 1994, the Central Government hereby makes the following rules, namely:-

In exercise of the powers conferred by clause (i) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994)(hereinafter referred to as “the Act”) read with sub-section (2) of section 9A of the Central Excise Act, 1944 (1 of 1944), made applicable to service tax vide section 83 of the Act, the Central Government hereby makes the following rules, namely :

Mumbai ITAT has held inMahatma Gandhi Seva Mandir Versus Deputy Director of Income-tax (E) 1(2), Mumbai that provisions of section 40(a) are not applicable while computing income of charitable trusts u/s 11 of Income Tax Act, 1961.

In this case disallowance u/s 40(a)(ia) was made by AO while computing income of the assessee-a charitable trust on the ground that TDS was not deducted on the certain payments made by trust and it was violation of section 40(a)(ia).

I have found the following judgement of Supreme Court on the issue of expiry period of stamp papers under Indian Stamp Act, 1899 as very useful one. In this case it has been held by Supreme Court that Stamp Papers do not have any expiry period under The Indian Stamp Act, hence it will be valid even after the purchase of 6 months.

Mumbai ITAT has held in an important case namely Shri Jatinder Kumar Madan vs ITO that exemption u/s 54 will be available for exchange of an old flat with new one as it amounts to construction of a residential house u/s 54 eligible for exemption.

It is notable here that exchange of capital asset also amounts to transfer of capital asset u/s 2(47) of Income Tax Act and consequently capital gain arises out of it.

Pune ITAT in Mahesh Nemichandra Ganeshwade vs ITO taking a liberal view on section 54EC has held that investment u/s 54EC can be made within 6 months from the date of receipt of consideration if the same could not be made within 6 months from the date of transfer of the capital asset.

ITAT relying upon the circular No. 791 dated 02.6.2000 of CBDT wherein CBDT has held in the context of capital gains arising u/s 45(2), that though the transfer arises in the year of conversion of a capital asset into stock-in-trade, the period of 6 months for investment u/s 54E has to be reckoned from the date of sale of the stock-in-trade, allowed the exemption u/s 54EC in such case.

Constitution is the foundation and source of powers to legislate all laws in India. Parliament, as well as State Legislatures gets the power to legislate various laws from the Constitution only and therefore every law has to be within the vires of the Constitution.

Talking about the taxation laws and the interpretation of taxation laws, every lawyer or a tax professional practicing taxation laws must understand the basic provisions of Constitution relating to taxation including the powers of Parliament and State Legislatures to legislate regarding levy and collection of tax, the restrictions imposed by our Constitution on such powers, entries concerning taxation in Central List i.e List-1 and State List i.e List-2 of Seventh Schedule to Constitution of India.

Punjab & Haryana High Court in M/s Balaji Bricks Industries & Another v State of Punjab [VSTI 2012 P&H B-238] has held that lump sum scheme for payment of sales tax on the basis of production capacity of Brick Klin owners is ultra vires of Article 246 read with Entry 54, List-II-State List of Seventh Schedule of Constitution.

The brick klin owners were being subjected to lump sum tax under section 5(4) of Punjab General sales tax Act, 1948. The grievence of the petitioners was that they(brick klin owners) cannot be subjected to a lump sum tax which is determined on the basis of the capacity of brick klin rather than actual sales.

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